A Guide to Ship Registration
The Cyprus Shipping Company
Legal Status
The first step to be taken by all non-European shipowners who wish to register a
vessel under the Cyprus flag is to form a Cyprus Shipping Company (hereinafter
referred to as ‘the company’) which will acquire the vessel in its name.
The company is registered as a private company with limited liability
(limited by shares) under the provisions of the Cyprus Companies Law, Chapter
113 of the Statute Laws of Cyprus, as amended.
For the incorporation of the company, the filing of the memorandum and
articles of association in Greek with the Registrar of Companies is required.
The incorporation of the company is evidenced by the issue of a certificate of
incorporation by the Registrar of Companies.
The time required for incorporation is about 3 - 5 days from the filing of
the incorporation documents. The present legislation contains provisions which
facilitate the acceleration of the various procedures in urgent cases.
Memorandum and Articles of Association
The memorandum must contain the objects of the company, set out as widely as
possible. These are the usual ones of a shipping company e.g. to own and operate
vessels, borrow money, mortgage its vessel, etc.
The articles usually adopt Table A of the Companies Law with a number of changes
or additions as deemed necessary. The most usual departures from Table A are:
pre-emption of the rights in case of transfer of shares; full borrowing powers
of directors; lower quorum for meetings; simplified sealing provisions,
appointment of alternate directors, etc.
Name of the Company
The name of the company must end with the word ‘limited’ or "Ltd". Prior
approval of the name by the Registrar of Companies is required. Very general or
deceptive names are not accepted nor are names likely to lead to confusion with
existing ones. It usually takes 2 days to obtain a name approval but the
procedure may be expedited upon request.
Registered Address
This, by law, must be in Cyprus. It is usually situated at the offices of either
the lawyers who have incorporated the company in Cyprus or the accountants who
act for the company in the island, unless the company has a more substantial
presence in the island and operates from fully fledged offices or has a sister
management company or affiliate here. The registers and minute-books are kept
with the secretary of the company.
Share Capital
The share capital of the company may either be nominal (e.g. CYŁ100) or the
actual amount to be deposited by the promoters for the pursuit of the venture.
It may be paid up in full or by calls, in cash or for consideration other than
cash and the shares may be allotted a par value. Any class of shares e.g.
ordinary or preference, and with different voting and dividend rights, are
acceptable. All shares must be nominative; bearer shares are unacceptable.
Shareholders
GENERAL
One shareholder is required for the incorporation and continued existence of
a Cyprus private company. The nationality of the shareholders is immaterial.
Under Cypriot law all shareholders of a shipping company may be foreigners
residing outside the island. The transfer of shares from one foreigner to
another is allowed.
SECURITY OF BENEFICIAL SHAREHOLDERS
The trust relationship is recognised under Cypriot law both by statute and in
equity. The principles of equity which apply under English law are applicable in
Cyprus as provided by the Courts of Justice Law, 1960. The security
documentation of the beneficial owner (according to the practice followed by law
firms) comprise the following:
- the trust deed;
- the original share certificates which are issued in
the names of the nominee shareholders;
- instruments of transfer of shares executed in blank;
- directors’ resolutions approving the transfer of
shares (where nominee directors are appointed);
- undated letters of resignation of the nominee
directors;
- irrevocable dividend mandates for payment of
dividends to the beneficial owners or to an account designated by them.
MEETINGS
General meetings may be held abroad and, as a rule, written resolutions signed
by all shareholders will suffice in lieu of a meeting. Annual general meetings
must be held every year, the first to be held within 18 months from
incorporation.
Directors
One or more directors may be appointed. The nationality of directors is totally
immaterial and does not affect the status of the company in any way. Thus, there
is no obligation to have local directors, unless it is considered advisable to
establish local management for tax or other reasons. Share qualifications are
not required.
The appointment and removal of directors are in the hands
of the shareholders, and special rights may be given for this purpose to a
specific class of shares. Board meetings may be held in any country of the
world. Directors’ resolutions may be taken in one of two ways:
- at a board meeting duly convened and held or
- without a meeting provided that the resolution is
signed by all the directors.
The names of the directors should be disclosed to the
Registrar of Companies by separate returns which are open to public inspection.
Their names and nationalities (for foreigners) must by law appear on the
letterheads but, in practice, this is not observed for shipping companies.
Secretary
A company secretary must be appointed by the directors and is removable by them.
The nationality of the secretary is totally immaterial and does not affect the
status of the company in any way. However, it is advisable that the secretary be
a company or a person resident at the place where the directors reside and that
an assistant secretary be appointed in Cyprus to attend to company annual
formalities in the island. This will ensure that all company annual returns are
promptly signed and filed with the Registrar of Companies by the secretary and
recorded. A director (but not a sole director), unless the company has one
shareholder, may also act as the company’s secretary.
Returns
Annual returns must also be filed. The names of the shareholders must appear in
the annual returns filed with the Registrar of Companies. Any charges against
the company must be filed and registered. Once filed the returns are open to
public inspection.
Procedure for Incorporation
A limited liability company can be incorporated in one of the following ways:
- by the actual shareholders appearing as subscribers to
the memorandum and articles of association and signing the said documents;
- by Cypriot nominees (usually members of the law firm
who are acting for the formation of the company) subscribing to the
memorandum and articles of association and later transferring their
subscription shares to the actual shareholders by instruments of transfer.
Required Particulars
In order to proceed with the formation of a Cyprus shipping company, law firms
in Cyprus require the following particulars:
- desired company name (more than one name should be
given if time is of the essence);
- amount of authorised share capital;
- whether shareholders will subscribe to the memorandum
and articles of association themselves or through Cypriot nominees;
- whether shares will be held in trust by Cypriot
nominees;
- names, address, nationality and occupation of
beneficial shareholders;
- name, address, nationality and occupation of
directors;
- name and address of secretary.
Auditors and Accounts
Auditors are appointed by the annual general meeting (or by the directors until
the convening of such a meeting) and are thereby removable. Powers and duties of
auditors are similar to those under English law prior to 1967.
The books may be kept abroad and
denominated in any currency.
Costs
The Companies (Fees and Dues Payable) Regulations provide that the fees payable
on incorporation are the Registration Fees, which are a fixed amount of CYŁ60
plus 0,6% on the nominal capital. There are no annual official fees payable in
order to keep the company in good standing and operative, but there is a stamp
duty of CYŁ10 for filing the annual returns.
Charges are levied for the
registration of charges against the shipowning company, with the Registrar of
Companies.
Commencement of Trading
Upon the issue of the certificate of incorporation by the Registrar of
Companies, the company may commence its activities forthwith and register a
vessel in its name.
Taxation
For the period ending on the 31st December 2020, no income tax shall be charged,
levied or collected:
- upon the income derived by the shipowner of a Cyprus
ship from the operation of such ship (with the exemption of any fishing
enterprises using Cyprus as their base);
- upon the dividends paid to the shareholder or the
members of a corporation, out of profits made from the operation of a Cyprus
ship.